Bassett Furniture Industries, Incorporated

Bassett reported Q2 fiscal 2026 consolidated revenue of $83.8 million, down $500,000 or 0.7% year over year. Diluted EPS was $0.24 versus $0.22, operating income was $2.2 million, and gross margin was 56.5%, up 90 basis points. Wholesale net sales were $53.1 million, down 2%, while Retail net sales were $55.5 million, up $1.3 million or 2.4%; Retail written sales increased 9.5%. Management said the quarter generated $7.4 million of operating cash flow, and cash and short-term investments ended at $53.9 million. Looking ahead, Bassett plans to raise Retail gross margins by 200 to 250 basis points in mid-July, though management said most of that benefit will not show until the fourth quarter. The company also expects $1.5 million to $2 million of additional annual expense reductions, with some SG&A leverage expected in the third and fourth quarters, and total 2026 capex of $10 million to $12 million.

Rob Spilman said the quarter showed improving momentum even in a still-challenging housing backdrop, with better traffic in April, May, and June and stronger conversion on higher-ticket design jobs. He emphasized that Bassett is not waiting for the market to improve and is instead pushing growth through existing stores, new store openings, e-commerce, and higher share in the professional design channel. His tone was upbeat but pragmatic, with repeated focus on execution, better customer analytics, and using AI and direct mail to improve marketing efficiency.

John Daniel highlighted the hard numbers: revenue of $83.8 million, gross margin of 56.5%, operating income of $2.2 million, and diluted EPS of $0.24. He pointed out that SG&A excluding new-store preopening costs was 53.3% of sales, and that excluding prior-year insurance proceeds, SG&A as a percentage of sales actually improved 20 basis points year over year. He also noted $7.4 million of operating cash flow, $53.9 million of cash and short-term investments, $473,000 of new-store preopening costs in the quarter, and planned 2026 capex of $10 million to $12 million, while reaffirming dividend payments and opportunistic buybacks.

Analysts focused on whether recent sales strength was broad-based or mostly upholstery-led, and management said it was slightly more concentrated in upholstery but strong across the board. They also pressed on gross margin and SG&A outlook; management said Wholesale margins are near their current level, Retail has the bigger opportunity, and the planned Retail price increase should help, though most of the benefit will show up in Q4. On e-commerce, management said the channel is increasingly selling upholstery and custom upholstery, and that Bassett can track web customers through its clienteling platform, reinforcing the idea that online and showroom traffic are part of one ecosystem. Questions also covered IEEPA tariff refunds, where management said it has seen some refunds and expects more, but does not yet know the magnitude.